{"id":39190,"date":"2020-11-10T15:12:01","date_gmt":"2020-11-10T07:12:01","guid":{"rendered":"https:\/\/zegal.com\/?p=39190"},"modified":"2023-01-12T14:20:40","modified_gmt":"2023-01-12T06:20:40","slug":"a-guide-to-hong-kongs-taxation-system","status":"publish","type":"post","link":"https:\/\/zegal.com\/en-nz\/blog\/post\/a-guide-to-hong-kongs-taxation-system\/","title":{"rendered":"A Guide To Hong Kong&#8217;s Taxation System"},"content":{"rendered":"<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-large wp-image-39326\" src=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-1280x855.jpg\" alt=\"hong kong\" width=\"1280\" height=\"855\" srcset=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-1280x855.jpg 1280w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-320x214.jpg 320w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-768x513.jpg 768w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-1536x1025.jpg 1536w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-2048x1367.jpg 2048w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-640x427.jpg 640w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-1024x684.jpg 1024w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-1200x801.jpg 1200w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/11\/pexels-arnie-chou-927485-1920x1282.jpg 1920w\" sizes=\"auto, (max-width: 639px) 98vw, (max-width: 1199px) 64vw, 770px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Hong Kong has proved itself to be an emerging and thriving business hub with Hong Kong&#8217;s realigned taxation system. Taxes are imposed based on a \u201cterritorial principle\u201d. This means that if your business income source is outside of Hong Kong, your Hong Kong-based business will be exempted from Hong Kong\u2019s taxes. Additionally, taxes are not imposed on profits that are remitted to Hong Kong from abroad. Therefore, all in all, it is highly attractive to conduct business through Hong Kong,\u00a0 because of its taxation system.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the individual level, the same \u201cterritorial principle\u201d applies as well. Therefore, the residential address of an employee is not the determinant for whether he will be taxed according to Hong Kong\u2019s taxation system. The tax imposed is determined on the origin of the employee\u2019s income. If it is arising from in or derived from Hong Kong, then it will be taxed according to Hong Kong taxes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The taxation calendar starts 1st April and ends 31st March the following year. Hong Kong adopts the Financial Reporting Standards (FRS) framework that builds upon the International Accounting Standards Board (IASB).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The overall statute governing the taxation system in Hong Kong is the Inland Revenue Ordinance and within this structure, there is its subsidiary legislation, the Inland Revenue Rules that covers the different aspects of taxes. All these are overseen by the <\/span><a href=\"https:\/\/www.ird.gov.hk\/eng\/welcome.htm\"><span style=\"font-weight: 400;\">Inland Revenue Department<\/span><\/a><span style=\"font-weight: 400;\"> which upholds the highest level of integrity and bureaucracy in its management of taxes.\u00a0<\/span><\/p>\n<h5><b>Individual Taxes*<\/b><\/h5>\n<table>\n<tbody>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">Income Level (in Hong Kong Dollars)<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">Tax Rate<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">1 to 50,000<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">2%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">50,001 to 100,000<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">6%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">100,001 to 150,000<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">10%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">150,001 to 200,000<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">14%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">Above 200,000<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">17%<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">* There is a flat 0% tax rate imposed on personal capital gains, income derived from overseas as well as dividends from a Hong Kong-based company.<\/span><\/p>\n<h5><b>Company Taxes*<\/b><\/h5>\n<table>\n<tbody>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">Income Level (in Hong Kong Dollars)<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">Tax Rate<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<p><span style=\"font-weight: 400;\">For Corporations<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">First $2 million<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">8.25%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">Over $2 million<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">16.5%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<p><span style=\"font-weight: 400;\">For Unincorporated Businesses<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">First $2 million<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">7.5%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p><span style=\"font-weight: 400;\">Over $2 million<\/span><\/p>\n<\/td>\n<td>\n<p><span style=\"font-weight: 400;\">15%<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">* There is also a flat 0% tax rate on all corporate capital gains, shareholder dividends as well as foreign-sourced income.\u00a0<\/span><\/p>\n<h5><b>Other Taxes\u00a0<\/b><\/h5>\n<table style=\"width: 100%;\">\n<tbody>\n<tr>\n<td style=\"width: 37.8125%;\">\n<p><span style=\"font-weight: 400;\">Type of Tax<\/span><\/p>\n<\/td>\n<td style=\"width: 62.0312%;\">\n<p><span style=\"font-weight: 400;\">Tax Rate<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 37.8125%;\">\n<p><span style=\"font-weight: 400;\">Property Tax<\/span><\/p>\n<\/td>\n<td style=\"width: 62.0312%;\">\n<p><span style=\"font-weight: 400;\">15%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 37.8125%;\">\n<p><span style=\"font-weight: 400;\">Estate Tax (Inheritance\/ Death Tax)<\/span><\/p>\n<\/td>\n<td style=\"width: 62.0312%;\">\n<p><span style=\"font-weight: 400;\">0%<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 37.8125%;\">\n<p><span style=\"font-weight: 400;\">Stamp Duty Tax<\/span><\/p>\n<\/td>\n<td style=\"width: 62.0312%;\">\n<p><span style=\"font-weight: 400;\">Dependent on the type of documents. Can be fixed duties or ad valorem duties<\/span><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 37.8125%;\">\n<p><span style=\"font-weight: 400;\">Hotel Accommodation Tax\u00a0<\/span><\/p>\n<\/td>\n<td style=\"width: 62.0312%;\">\n<p><span style=\"font-weight: 400;\">0%<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p style=\"text-align: center;\"><b><i>This article does not constitute legal advice.<\/i><\/b><\/p>\n<p style=\"text-align: center;\"><i>The opinions expressed in the column above represent the author\u2019s own.<\/i><\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/register.zegal.com\/\"><b>Start managing your legal needs with Zegal today<\/b><\/a><\/p>\n<p><a href=\"https:\/\/support.zegal.com\/hc\/en-gb\/articles\/115009802768-Is-E-Signing-Legally-Binding-\">READ MORE: A Guide to Singapore\u2019s Taxation System<\/a><\/p>\n<p><a href=\"https:\/\/zegal.com\/blog\/post\/a-guide-to-australias-taxation-system\/\">FURTHER READING: A Guide to Australia\u2019s Taxation System<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; Hong Kong has proved itself to be an emerging and thriving business hub with Hong Kong&#8217;s realigned taxation system. Taxes are imposed based on a \u201cterritorial principle\u201d. This means that if your business income source is outside of Hong Kong, your Hong Kong-based business will be exempted from Hong Kong\u2019s taxes. Additionally, taxes are [&hellip;]<\/p>\n","protected":false},"author":96,"featured_media":39326,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","inline_featured_image":false,"footnotes":""},"categories":[14278,133],"tags":[],"usecases":[],"businesstypes":[],"country":[],"class_list":["post-39190","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-management","category-startup"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.8 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>A Guide To Hong Kong&#039;s Taxation System | Zegal New Zealand<\/title>\n<meta name=\"description\" content=\"Everything you need to know about Hong 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